Just How Binding Is that Illegal, Immoral AND Un-American Condition on Your Project?

Your land use approval contains a condition – say, the sacrifice of your first born child prior to the issuance of the 50th certificate of occupancy – mandated by a local ordinance which is successfully challenged by someone else a year or two after you start building but before you seek the 50th certificate. Can you get the condition set aside?

Unfortunately, the answer is no. You’re bound by it because you failed to challenge it yourself in a timely manner.

Every developer is aware that the time in which to challenge an undesirable condition imposed on a land use approval is short – typically 90 days. What most developers are not aware of is that a failure to challenge a condition within the time allowed prohibits a later challenge even if it later becomes clear that the condition violated the law at the moment it was imposed.

This was recently highlighted in a case which involved an inclusionary housing condition imposed on a use permit for an apartment building with retail space on the ground floor in the City of Berkeley. Five years later, a different developer involved in a different project in a county far, far away, successfully challenged a similar condition as being illegal on the grounds that it had been preempted by a state law which prohibited precisely that kind of condition. The second developer was successful because it had filed its lawsuit within 90 days of the issuance of the permit which allowed it to build its apartment project. After learning of the second developer’s successful challenge of the similar condition, the first developer told Berkeley that it didn’t intend to provide the low income units required by the permit condition. Although the City agreed that it could no longer impose a similar condition on new rental projects, it sued to enforce the condition it imposed years earlier. The court issued a judgment which forced the developer to comply with the condition and to provide the required number of subsidized low income units.

The bottom line? If a developer believes that a condition on a land use approval is illegal, the developer must file a lawsuit seeking to invalidate the condition within the time allowed by law. A failure to do so means that the project is bound by the condition – even if the condition was illegal when imposed – and the developer and subsequent owners of the project will be forced to live with it.

Is there any downside to filing such a lawsuit? Aside from the ill will that may be engendered in the city or county issuing the permit and imposing the condition, there’s a real possibility that a successful lawsuit will have the condition declared invalid, but may also result in the approval being set aside with direction to the city or county to reconsider the approval anew with the possibility that new conditions might be imposed or, worse, that the approval might even be denied. So, carefully think through the end-game before you pull the trigger on a lawsuit against the city or county issuing your project approval. But that’s another story for later discussion.